[Federal Register Volume 71, Number 184 (Friday, September 22, 2006)]
[Notices]
[Page 55544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8097]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Ex Parte No. 558 (Sub-No. 9)]


Railroad Cost of Capital--2005

AGENCY: Surface Transportation Board. DOT.

ACTION: Notice of decision.

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SUMMARY: On August 28, 2006, the Board served a decision to update its 
computation of the railroad industry's cost of capital for 2005. The 
composite after-tax cost-of-capital rate for 2005 is found to be 12.2%, 
based on a current cost of debt of 5.36%; a cost of common equity 
capital of 15.18%; and a capital structure mix comprised of 30.41% debt 
and 69.59% common equity. The cost-of-capital finding made in this 
proceeding will be used in a variety of Board proceedings.

DATES: Effective Date: This action is effective August 28, 2006.

FOR FURTHER INFORMATION CONTACT: Paul Aguiar, 202-565-1527. (Federal 
Information Relay Service (FIRS) for the hearing impaired: 1-800-877-
8339).

SUPPLEMENTARY INFORMATION: The cost-of-capital finding in this decision 
may be used for a variety of regulatory purposes. Based upon Western 
Coal Traffic League reply comments, we will institute a separate 
advance notice of proposed rulemaking to explore the most suitable 
methodology to calculate the cost of capital. That proceeding will 
provide all interested parties an opportunity to comment on the 
discounted cash flow (DCF) model, the proper source for the inputs to 
that model, and whether the Board should adopt an alternative to that 
method, such as the Capital Asset Pricing Model (CAPM), for future 
cost-of-capital determinations. The Board's decision is posted on the 
Board's Web site, http://www.stb.dot.gov. In addition, copies of the 
decision may be purchased from ASAP Document Solutions by calling 202-
306-4004 (assistance for the hearing impaired is available through FIRS 
at 1-800-877-8339), or by e-mail at <a href="/cdn-cgi/l/email-protection#c8a9bba9b8acab88beadbaa1b2a7a6e6a6adbc"><span class="__cf_email__" data-cfemail="38594b59485c5b784e5d4a5142575616565d4c">[email protected]</span></a>.

Environmental and Energy Considerations

    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

Regulatory Flexibility Analysis

    Pursuant to 5 U.S.C. 605(b), we conclude that our action in this 
proceeding will not have a significant economic impact on a substantial 
number of small entities. The purpose and effect of this action are to 
update the annual railroad industry cost-of-capital finding by the 
Board. No new reporting or other regulatory requirements are imposed, 
directly or indirectly, on small entities.

    Authority: 49 U.S.C. 10704(a).

    Decided: September 15, 2006.
    By the Board, Chairman Nottingham, Vice Chairman Mulvey, and 
Commissioner Buttrey.
Vernon A. Williams,
Secretary.
[FR Doc. 06-8097 Filed 9-21-06; 8:45 am]
BILLING CODE 4915-01-P


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